Making business sense of electronic commerce

D. Jutla, P. Bodorik, C. Hajnal, C. Davis
1999 Computer  
E lectronic commerce is possibly the most promising information technology application that enterprises have seen in recent years. It has revolutionized supply-chain management and has enormous potential for retail merchandising and brokerages. PC Warehouse and Dell Computers report more than $1 million in daily Internet sales. According to OpenMarket (http://www.openmarket. com), relative to other methods, Internet technology offers five to ten times improvement in reaching new customers,
more » ... asing the speed at which business is conducted, and decreasing per-transaction cost. These benefits do not come without careful planning, however. Most of the business community acknowledges that intensive use of any information technology means transforming current, often core, business models and processes. Firms that have successfully invested in e-commerce, such as Microsoft and IBM, have had to depart from some traditional practices. They often overlap business and technology skills, for example, so that they can search for and experiment with the most profitable combinations of technology and organization. This type of experimentation is key to gaining a competitive edge and requires being able to manipulate a range of business models, application frameworks, and strategies for adopting e-commerce. The array of solutions can be daunting. E-commerce implementation alone offers a potpourri of specialpurpose hardware servers, distributed computing software, Internet protocols, and transaction management technologies. Moreover, some technologies are in their infancy. Microsoft, for example, released one of the first distributed transaction servers for Web applications in December 1996. Distributed software component models such as Microsoft's DCOM (Distributed Common Object Model) and CORBA (Common Object Request Broker Architecture) continue to rapidly evolve. In addition to selecting a business model and framework for evaluating applications, enterprises must select effective strategies for investing in e-commerce. These include outsourcing, whether to build the e-commerce application in-house or purchase one off the shelf, and what hardware and software technologies to consider in the decision-making process. This article is meant to show the depth and scope of the decision-making process that accompanies ecommerce adoption. Although we talk about specific strategies and tools, the final selection inevitably falls on the individual organization and depends on too many factors to cover in one article. BUSINESS MODELS There are currently three main types of business model. However, although the business model largely dictates the application, new technologies (and hence applications) often motivate new business models. As e-commerce matures, we should see hybrids of these three models and possibly completely new ones. E-broker In the e-broker (also called the cybermediary) model, the enterprise is essentially a middleman between the supplier and buyer. Examples are 1-800-FLOWERS,, and This model has many advantages: It reduces the inventory management overhead from staffing and office space and frees capital that would otherwise be used up in inventory control. Most important, it provides specialization (marketing, product, delivery) across the supply chain from manufacturers to customers. E-broker companies are marketing specialists; their suppliers specialize in production planning, inventory management, and the specific product being offered. The more specialized the functions, the higher the quality of the service the company can provide for the cost. Because of these features, the e-broker model makes a com-Although its infrastructure is still very young, e-commerce continues to create new business models and innovative marketing and technology strategies. To avoid unraveling their core processes, organizations considering e-commerce applications must take time out to evaluate the many facets of adoption and integration.
doi:10.1109/2.751331 fatcat:xoxkpvhlfnarjcxo75rbtjcbsy